BloombergTAIPEI (Bloomberg) — While Chinese and U.S. officials enter heated trade negotiations this week, companies that have built the technology industry’s global supply chain aren’t waiting to see how the talks turn out. In the latest example, Delta Electronics Inc. is joining a wave of key suppliers accelerating a shift of production away from China.
Delta, which makes components to help clients like Microsoft Corp. and Huawei Technologies Co. manage power and cooling for datacenters to factories, is moving some production back to its home base of Taiwan and Thailand amid the threat of a trade war and U.S. security concerns. It’s also taking the unusual step of building three to four plants in India, responding to Prime Minister Narendra Modi’s Make-in-India program.
U.S. President Donald Trump threw trade negotiations into chaos this week with a threat of higher tariffs on Chinese goods as soon as Friday, accusing Beijing of backpedaling on concessions.
With thousands of critical suppliers caught in the crossfire, a growing number are diversifying beyond China to places like Southeast Asia and India.
Delta’s Chief Executive Officer Ping Cheng concedes that India’s technology ecosystem remains far less developed than its giant Asian neighbor’s. But he is keen to add one of the world’s fastest-growing major economies to a production chain that now stretches from Europe to the U.S., via a subsidiary it recently secured a controlling stake in.
“The products will be mainly for the domestic Indian market,” Cheng said in an interview last week. “The trend of making in India is inevitable as it’s a big market. But it remains to be seen whether the supply chain locally will in future be complete and used for exports.”
Delta is one of a raft of Taiwan component makers that form key links in a global supply chain serving the world’s largest tech names. The prospect of sky-high tariffs is prompting the manufacturing powerhouses behind the world’s electronics to scour the globe for alternatives beyond China. That’s threatening to splinter a decades-old supply chain, in which Taiwan giants operate sprawling Chinese factories to assemble devices that are then sold by the likes of Apple Inc., HP and Dell under their own brands.